Need help on buying a SVX

This morning, me and my girlfriend went to test drive a Subaru SVX. After I start the engine, I heard some "dut, dut, dut.." sound under the hood. Many white smoke coming out from the exhaust. Went to the highway, the temp is at the middle(but little floating), but exit the highway and stop at the traffic light, the temp went to 3/4. But later on in local traffic, the temp is between 3/4-1/2. Is that really mean overheat?? But it never go to the top.

The car need premium gas. Is that the knocking noise and the unsteady temp is because low octane rate??
The car is $3000, 94, 130K miles.

Hopefully I can be a menber here.